The Film Council has welcomed Chancellor Gordon Brown's announcement that tax relief for film production in the UK will be extended until April 2005.

The move followed extensive discussions between the Department for Culture, Media and Sport, the Film Council and the Treasury during the past six months.

John Woodward, the council's chief executive officer, said it was "hugely important" for the British film industry.

The tax relief was first introduced by the government in 1997, and it is estimated that in 1999/2000 approximately £500m of film production was generated through it.

'Firm foundation'

Mr Woodward added that the tax relief [known as Section 48] has been "vital to the recent resurgence of film production in the UK".

"There is now a firm foundation for growth and exports over the next few years," he added.

The council, which has sole responsibility for public film funding, said the continuation of the tax relief has delivered a "real benefit" to the investment community for British films.

Tax incentives are a key component of the council's strategy to help develop a sustainable UK film industry.

Investment up

The council added that Section 48 complements the long-standing relief that can be used for "British-qualifying" films with budgets over £15m.

It said the tax relief has been instrumental in attracting international films to be made in the UK, by sharply increasing inward investment into its production sector.

During the last eight years investment has risen from £58m in 1992 to £539m in 2000.

The creation of high quality jobs across the film production sector has provided a consistent flow of work for film crews and related services as well as generating indirect economic activity, the council concluded.

The news follows an announcement made at the beginning of the year that UK film production was up by a third in 2000 thanks to movies such as Harry Potter and the Sorcerer's Stone.

Other high-budget productions have included 51st State and Tomb Raider.